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When these K1s are sold, either partially or completely, the broker will normally show the initial investment cost, but the K1 will have attachments showing both a basis adjustment and an ordinary income component of the gain or loss. The basis adjustment increases the gain and the ordinary income component will decrease the gain on the Sch D and also be reported on the 4797 (as Catherine already noted). On 8949, you will use adjustment codes BO to net the two adjustments so the Sch D gain is correct. You can do this even if you're reporting totals from the 1099-B. And the state gain or loss is almost always different, so you'll need an adjustment on the state return, if there's a state income tax. When I see these investments by a client, I always warn them that their tax prep bill will be higher every year that they own them and a lot higher when the sell them.

For the most part, the articles there are superfluous; most of the giggles come from the headline. Love the barcode idea! (Wasn't it Heinlein who claimed that an "honest" politician is one who stays bought by the initial buyer?)

Except Alaska. My contribution to the discussion here is in the sig area.

Upon sale, the partnership *usually* provides a worksheet for reporting the sale. This is separate from the K-1 (although sometimes appended) and also separate from any brokerage Schedule D-style reporting. In the worksheet, information is provided for determining LTCG, Ordinary Income, Form 4797 sale of business property items, and more. Look for that.

Thank you Mr. Normal. This is a PTP. Taxpayer paid $175,000 for it, and has been reporting income for 5 years, and has been also receiving distributions which are not necessarily equal to the income. Will sell in 2025 for $200,000. If there is no need to track basis, then is it as simple as reporting $25,000 LTCG? Can't find this in IRS Sch D instructions, and not sure I would understand it anyway.

If this is a PTP (Publicly Traded Partnership), you don't need to track basis. But if this a regular limited partnership, yes, basis is increased by taxable and nontaxable income and decreased by deductible and nondeductible expenses/losses. So basically everything in and out. If you didn't allocate basis to passive losses, there'd be no basis for deducting those losses later.

The formula for partnership basis calls for a decrease if there are nondeductible expenses. One example is 50% nondeductible meals. However, in a "limited" partnership, nondeductible losses could include losses disallowed because they are passive. Question: Are passive losses required to be deducted from basis according to the formula? I don't see why they wouldn't but thought I would ask...

“The problem with socialism is that you eventually run out of other people's money.” Margaret Thatcher "A tax is a fine for doing well, a fine is a tax for doing wrong." Mark Twain "A person doesn't know how much he has to be thankful for until he has to pay taxes on it." Ann Landers "Worried about an IRS audit? Avoid what's called a red flag. That's something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That's a red flag!" Jay Leno

“Don’t steal, the government does not accept the competition.” Unknown

"Everything is bigger in TEXAS!" Oh, you said TAXES....oops Tom Longview, TX

By far my favorite satire site is The Babylon Bee. A recent parody news story pictured one of them with a bar code on their head with the following explanation “To make purchasing congresspeople easier and faster for lobbyists, congresspeople will now have barcodes printed on their foreheads to be conveniently scanned at newly installed self-checkout machines.” The article in and of itself is funny, but the video “News Bulletin” is hilarious. I’d post a link, but it probably violates a few terms of our forum.

That's funny since Al Capone was taken down partially due a forensic accounting investigation of his finances by a U S Treasury Agent.

“They can’t collect legal taxes from illegal money.” Al Capone “The income tax created more criminals than any other single act of government.” Barry Goldwater

“The art of taxation consists of plucking the goose so as to obtain the most feathers with the least amount of hissing.” Jean-Baptiste Colbert

Government's view of the economy could be summed up in a few short phrases: If it moves, TAX it. If it keeps moving, regulate it. And if it stops moving, subsidize it." — Ronald Reagan

Copied from Forbes: “For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” — Winston Churchill “Income tax returns are the most imaginative fiction being written today.” — Herman Wouk “I am proud to be paying taxes in the United States. The only thing is I could be just as proud for half of the money.” — Arthur Godfrey “A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money.” — G. Gordon Liddy “The taxpayer: that’s someone who works for the federal government, but doesn’t have to take a civil service examination.” — Ronald Reagan “The income tax created more criminals than any other single act of government.” — Barry Goldwater “Collecting more taxes than is absolutely necessary is legalized robbery.” —Calvin Coolidge “This is too difficult for a mathematician. It takes a philosopher. The hardest thing in the world to understand is the income tax.” — Albert Einstein “The difference between death and taxes is death doesn’t get worse every time Congress meets.” — Will Rogers “In 1790, the nation which had fought a revolution against taxation without representation discovered that some of its citizens weren’t much happier about taxation with representation.” — Lyndon B. Johnson “Why does a slight tax increase cost you two hundred dollars and a substantial tax cut save you thirty cents?” — Peg Bracken I'm smiling but I don't feel any wealthier

I truly asked my hairdresser yesterday and she said that I was doing just fine. She is self-employed too.

Can he use up the old excess in 2025 by not contributing that amount this year? Or, does he not qualify to make any Roth contributions this year?

I think they call it the sausage making in DC. I call it Halloween - Senators go to the doors of lobbyists and hold out a bag looking for cash to be put in. The more cash the AICPA can put in the senator's candy bag, the more chance the senator will make changes to the sausage recipe. Not appealing to watch.... Tom Longview, TX

The 6% penalty applies each year the excess contribution remains in the account. The excess and associated earnings must be distributed before the penalty disappears.

Articles in both Bloomberg Tax and the Tax Foundation say the Bill closes use of the PTET deduction by SSTBs. It also restricts the use of the 199A deduction by SSTBs. As a result the AICPA is putting a major emphasis on getting the Senate to remove these changes! Are we having fun yet

It is an SNT with the standard Health, Education, Maintenance, and Support clauses from what I am told. The trust will be funded upon her death to preserve her disabled adult child's SSI benefits. Her other children will just inherit from the estate. I wanted to familiarize myself with more information on the SNT to see what expenses the trust can deduct, as well as if the trustee has to pass any income via a K-1 to the beneficiary and what that will do to his SSI reporting requirements. The client has been working with a lawyer to update the Trust documents that were created many years ago. Her other children will be the trustees. Wanted to educate myself on these types of reporting. Thanks

Is it an ABLE account or a SNT account? It can be confusing to interpret what the client is telling us. If it is a SNT, then all income is taxed to the trustee. Not a tax advantaged plan. Take a close look at what she is doing and see if it makes sense for what she is trying to accomplish. Tom Longview, TX

Was working with an elderly client on other matters, when she told me she has updated her will which includes provisions for a Special Need Trust for an older child collecting SSI and ask if I would work with her other children and or their accountants to answer any questions on her finances if need be. I will not be handling either the Estate or Trust. Wanted to do some reading on SNT's and QDT's and looking for more information? Does anyone have any recommended articles, links or recommendation for CPE courses regarding the matter? Thanks in advance

It must be. I have never heard of a Wisconsin Energy Tax Credit on taxes.